During a conference on digital resources, in Brazil, BlackRock spoke very well of the crypto Bitcoin and its potential against inflation for the personal portfolio.
The well-known asset manager praised the characteristics of the currency, explaining how it can prove to be an excellent hedge against inflation.
According to Blackrock, gold and bonds are less efficient than cryptocurrency in the long term.
Let’s see all the details below.
Crypto and BlackRock: the manager sees the potential of Bitcoin for an anti-inflation portfolio
At a crypto conference in Brazil, the asset manager BlackRock stated how Bitcoin can offer great advantages for long-term investment portfolios.
According to Jay Jacobs, head of thematic and active ETFs of the company, the cryptocurrency has now achieved prestige and institutional legitimacy on a global level.
Its continuous appreciation over the years has allowed financial analysts to consider the asset as a profitable hedge against inflation and economic crises.
Despite suffering from high volatility of prices, Bitcoin records such positive performances in the long term that it is elected as the best asset of the decade for investment portfolios.
Jacobs from BlackRock has invested in the idea that crypto offers protection against the ongoing decline in the purchasing power of the dollaro USA.
From 1913 to today, the FIAT currency has indeed lost much of its exchange value with other goods and services. In particular, since the monetary system of the Federal Reserve was introduced, the dollar has lost 97% of its purchasing power.
Precisely for this reason, BlackRock recommends an exposure of 1% to 3% in Bitcoin or in companies that reflect its growth for investment portfolios.
The same representative of BlackRock then publicly praised blockchain technology as one of the most disruptive digital tools of recent years.
“This is one of the fastest-growing technologies we have seen in recent years. If we are consuming things online, such as playing video games and purchasing digital content, then it makes sense to have digitally native assets to conduct such transactions.”
Gold, Bonds, and Bitcoin: which asset to add to the portfolio as a safe haven and hedge against inflation?
The analyst Jacobs from BlackRock, in praising Bitcoin, compared the crypto with other typical inflation hedge assets for investment portfolios.
In one slide, in fact, he compared some of the characteristics of Treasury U.S and Gold, highlighting how Bitcoin is positioning itself within the so-called “global monetary alternative”.
More closely, the head of BlackRock ETFs highlighted how bonds suffer from infinite supply and centralized governance, although they can combat the weight of inflation in the long term. These guarantee a constant cash flow in the face of low volatility and a generally low trading cost.
Gold represents a less “secure” alternative compared to Treasuries, with a semi-fixed supply and a promising history. The main drawback of including gold in investment portfolios is the very high management and storage costs.
Bitcoin, on the other hand, offers numerous advantages such as a fixed supply, a decentralized governance and virtually zero storage and exchange costs.
The crypto suffers, however, from high volatility and a limited track record, which do not offer assurances to those who decide to include it in their portfolio.
In all this, the market cap of Bitcoin is definitely lower compared to the other two assets, with 1.3 trillion dollars against the 14 trillion of Gold and the 25 trillion of U.S. Treasuries.
This means that on one hand, investing in Bitcoin presents less security compared to traditional hedging investments, but at the same time offers greater opportunities for appreciation.
Obviously, in investment portfolios, as BlackRock reminds us, there is also room for a mixed allocation of the 3 different products.
Bitcoin does not necessarily represent a better choice compared to the other two, especially if one does not operate on large time frames.
What Jacobs from BlackRock focuses on is the fact that the crypto is gradually securing a position of prestige among analysts, offering more and more assurances to the investor.
The guarantees in this sense are given by the charts and the excellent performance of the asset as the years go by.
The crypto ETFs of BlackRock
BlackRock offers its clients the opportunity to gain exposure to Bitcoin through spot ETFs crypto, replicating the performance of the asset without the client holding the underlying in their portfolio.
This tool, launched in January 2024 and known as IBIT, has opened the doors to large institutional investments expanding the notoriety of the crypto.
Many large funds prefer to bet on Bitcoin through a regulated product, without having to download a crypto wallet and without going through gray legislative areas.
In less than a year, IBIT has attracted as much as 22.56 billion dollars in “Net Assets”, reaching to encompass 1.89% of the Bitcoin supply.
Its graphical performance obviously reflects the trend of the underlying, and shows an increase of about +35% since their launch.
Overall, all spot Bitcoin ETFs (not just BlackRock’s) have a capitalization of 56.63 billion dollars, which is 4.74% of the Bitcoin supply.
In addition to the investment instrument on Bitcoin, BlackRock has also introduced a spot ETF on Ethereum for institutional portfolios.
This last one, known as ETHA, did not have the same appeal recorded by the ETF on Bitcoin, reporting low trading volumes and few inflows.
Since its launch at the end of July. The product has attracted 918 million dollars in Net Assets, equal to 0.35% of the supply of Ethereum.
Blame also and especially the disappointing performance of the underlying, investors have preferred to bet on the Bitcoin ETF given the surprising results of the first months.
